The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making [Hardcover]

Thomas T. Nagle (Author), Reed K. Holden (Author)

Book Description

ISBN-10: 0136693768 | ISBN-13: 978-0136693765 | Publication Date: May 1994 | Edition: 2nd

This entire book is a practical guide loaded with topical examples. As in the first edition, The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making, Second Edition shows how sound analysis could have prevented some well-known pricing failures and, in other cases, has pointed the way to profitable successes! Nagle and Holden offer a conceptual approach that helps readers learn how to THINK about pricing, and include step-by-step formulas and procedures that show readers HOW to analyze a pricing problem and formulate a pricing strategy. A sampling of topics includes advice on how to understand how costs affect your pricing and profits, integrate costs with market-based pricing, integrate the elements of profitability, capture full value through price segmentation, adapt strategy in a changing life-cycle environment, develop models to aid in anticipating purchase behavior, and determine the constraints on profit maximization.

Editorial Reviews

From the Publisher

Practical in focus and lively in style, this text provides a comprehensive, managerially-focused guide to formulating pricing strategy. --This text refers to the Paperback edition.

From the Back Cover

Practical in focus and lively in style, this book provides a comprehensive, managerially-focused guide to formulating pricing strategy. Explains ideas and concepts that are essential to integrate pricing successfully into marketing strategy and that should be part of every marketer's repertoire. It emphasizes the actual process of making pricing decisions. It develops a procedure for pricing that is consistent with the economics, but also incorporates the psychological aspects of price sensitivity and the recognition that managers must make decisions with incomplete information. For readers interested in pricing strategy or managerial economics. --This text refers to the Paperback edition.

Product Details

• Hardcover: 409 pages
• Publisher: Pearson P T R; 2nd edition (May 1994)
• Language: English
• ISBN-10: 0136693768
• ISBN-13: 978-0136693765
• Product Dimensions: 9.1 x 6.1 x 1 inches
• Shipping Weight: 1.5 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #151,823 in Books (See Top 100 in Books)
  • #19 in Books > Business & Investing > Management & Leadership > Pricing

Customer Reviews

Most Helpful Customer Reviews

85 of 86 people found the following review helpful:

5.0 out of 5 stars Superb guide to pricing as business strategy, August 28, 2000

By 

Adam F. Jewell (Pittsburgh, PA USA) - See all my reviews
(REAL NAME)   

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (Hardcover)

Written with great clarity, "The Strategy and Tactics of Pricing" is a phenomenal book. It begins with an explanation of strategic pricing, and proceeds to cover competition in the market place, segmentation of buyers, pricing and the marketing mix for industrial and consumer goods, as well as the psychology of pricing. Also covered are models for determining price sensitivity, implications of sales staff price setting and negotiation, and finally, legal aspects of pricing.

After reading this book, you will understand the pitfalls of pursuing market share at all costs and common mistakes businesses and sales people make when setting or negotiating price. You will view your current pricing structure and strategy in a new light, and be able to spot the weak spots. You'll have a better picture of how to attract the right buyers, those that can be served profitably.

The book indirectly touches on topics covered in Co-opetition, and Thinking Strategically, as well as elements of the Theory of Constraints (see Eli Goldratt's "The Goal" and "It's Not Luck" or "Management Dilemmas" by Eli Schragenheim)

I can't recommend this book highly enough. As for the other reader who states:

"After reading this book, I was able to talk circles around the $20,000 "marketing consultant" we were considering."

believe it, it's that valuable!

43 of 44 people found the following review helpful:

5.0 out of 5 stars The book changes the way people think about pricing!!!, June 6, 1998

By 

Reed K. Holden - Coauthor - [e-mail] (Marlborough, Massachusetts) - See all my reviews

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (Hardcover)

Too many firms in the world today have problems with pricing. The impact of those problems is that these companies lose millions of dollars of profit opportunity every day. We wrote this book to get people to realize that pricing is often the lightning rod and symptom of other problems in companies. The true problems often lie in other areas such as sales, finance, production, marketing and management.

To make matters worse, managers tinker with price rather than understanding and addressing the real problems. They do this because pricing is the easiest and fastest thing to fix (usually lowering it). Those price fixes often provide the least sustainable advantages for companies. For example, salespeople are often incented to use price as a tactic to close a sale rather than to use an in depth understanding of the product's value to convince the customer that the price is fair. Managers exacerbate the problem by a) giving salespeople the right to lower price and b) insisting that they never lose an order on price. Customers learn to take advantage of these tactics by always asking for lower prices. The more they use this tactic, the better they get at it and the more sellers think that they have no choice but to get beat up by customers. Game, point and match to the customers---but, they're not the problem!!!

Read this book and learn to ask more strategic questions around price. Learn to adopt compatable goals so that everyone in the organization works to a common one----profit!

Reed K. Holden, Co-Author, "The Strategy and Tactics of Pricing" - [e-mail] Strategic Pricing Group Inc., Marlborough, MA

28 of 29 people found the following review helpful:

5.0 out of 5 stars Gem whose value is much higher than its sale price., August 11, 2000

By 

Serge J. Van Steenkiste (Atlanta, GA) - See all my reviews
(REAL NAME)   

This review is from: The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making (Hardcover)

Thomas Nagle and Reed Holden successfully demonstrate with practical examples that strategic pricers are diplomats rather than generals, contrary to common belief. Diplomats know that initiating price discounts can undermine the profitability of their business. Price cutting unduly focuses the attention of the customer base on their wallet rather than the value of the product offering to their life/business. Diplomats will carefully look not only at the short-term gain, but also at competitors' long-term reactions to measure the impact of such a move on the bottom line. Furthermore, diplomats do not share the misconception of generals that the ultimate winner must meet every challenge. Diplomats will integrate the product's relevant costs, the customer segments' price sensitivity and the behavior of the competition in their marketing plans. The analysis of those factors will then allow diplomats to weigh the costs and benefits of competition and only fight battles for which the likely benefits are greater than the likely costs. Nagle and Holden also stress the importance of establishing pricing policies consistent with the plans, especially when there is no fixed-price policy. Diplomats must give salespeople incentives to make profitable sales, not sales for their own sake. Salespeople will adapt their sales pitch to the different price sensitivity of price buyers, loyal buyers and value buyers. Nagle and Holden draw the attention of their readers to the fact that a product's price influences the market's perception of its features and benefits and those of other products with which it is sold, the effectiveness of its promotion, and the interest it generates in channels of distribution. They observe that the opposite is also true. Furthermore, Nagle and Holden look at the impact of the choice of an independent channel of distribution on corporate pricing policy. Diplomats must be attorneys specializing in legal pricing or at least hire one. They must consider not only what is profitable, but also what is legal and ethical in establishing pricing policies towards channels of distribution, end users, and competition. Pricing is such a legal minefield that both authors dedicate one chapter of their book to that delicate subject. Nagle and Holden also challenge another idea that many marketers share: The key to profitability is to achieve a dominant market share. Most companies in competitive markets try to be all things to all people rather than excel in serving the needs of particular customer segments. Both product differentiators and cost leaders have demonstrated that targeting a segment of customers and focusing on them pays off handsomely. A third edition of this book integrating the impact of the New Economy on pricing should be a welcome update to that masterpiece. To summarize, The Strategy and Tactics of Pricing is a must read for anyone involved or interested in pricing. The content is so rich that I am still discovering new aspects about pricing two years after I read the book for the first time.